A dynamic model for planning the communications mix for industrial products

Personal selling has traditionally been considered to be the most important element of the communications mix in industrial marketing, with other communication elements, notably advertising, taking on a secondary role. Although more expensive than advertising on a cost per customer basis, a sales visit can be sharply focused onto a specific customer and is thus more effective. In addition to its role in creating awareness for a new product, advertising has the ability to enhance the effectiveness of a sales call. While evidence of such interaction between personal selling and advertising is mentioned in the literature, no attempt has been made to explicitly model this interaction and to evaluate its implication on the trade off between the two in planning the communication mix. Given the high--and steadily increasing--cost of a sales call, the role of advertising in supporting personal selling assumes considerable significance. This dissertation examines the communications mix decision problem for a mature industrial product and a new product. In the mature product situation, communication effort is modeled to directly influence the share. In the new product case, where a monopoly status is assumed, the adoption process is examined over a set of stages--awareness, evaluation and adoption. The interactive effects of personal selling and advertising, the influence of word of mouth and the heterogeneity among buying firms, in terms of responsiveness to communication effort are explicitly considered. We develop a dynamic model that enables the manager to evaluate the implications of alternative communications plans over the planning horizon and to provide normative guidelines by determining the optimal communications mix, including the allocation of personal selling effort across segments given the objectives and constraints of the selling firm. Some indicative results are that advertising has a greater role in the communications budget when the number of accounts is large and that the total communications spending is higher at \u27moderate\u27 levels of responsiveness to the firm\u27s communication efforts. For new products, a stronger word of mouth effect allows the firm to cut back on total communications spending, particularly its personal selling effort